The French Healthcare and Hospital System

Social Protection System

The social protection system created in 1945 aimed primarily at workers
and their families. The expansion of health insurance coverage was implemented
in stages during the 1960s. The Universal Health Coverage Act (CMU) concluded
this process in 1999 by establishing universal health coverage.

Today, three main health insurance schemes are dominant: the general
scheme for employees and their families (84% of the population) and for CMU
beneficiaries (1.6% of the population); the agricultural scheme for farmers and
agricultural employees and their families (7.2% of the population); the scheme
for non-agricultural self-employed people (5% of the population).

Although run by employers and employees, the social protection system
always faced a strong influence of the State in the financial and operational
management of health insurance.

This was reinforced by two aspects of the 1996 reform: a new
income tax to fund the system instead of full financing by wage contributions; a
more active role for parliament in determining policy directions and expenditure
targets.

Health Policy Management

The responsibility to define the health policy and to regulate the
healthcare system is divided between the State, the statutory health insurance
funds and the local communities.

Since 1996, the Parliament adopts every year an Act that defines a
projected ceiling for health insurance spending for the following year, known
as the ONDAM. The Ministry of Health then controls a large part of the
regulation of healthcare expenditure. It divides the budgeted expenditure
between the different sectors and for hospital care between the different regions.
It approves the agreements signed between the health insurance funds and the
unions representing self-employed health - care professionals and sets the
prices of specific medical procedures and drugs. The State also defines the
number of medical students to be admitted to medical school each year (numerus
clausus), the planning of equipment and priority areas for national health
programmes.

The Ministry of Health has services at local level: directorates
of health and social affairs in the regions and departments. A pro - cess of
deconcentration of the organisation and management of the French healthcare
system began in the early 1990s. Regional hospital agencies are responsible since
1996 for hospital planning (for both public and private hospitals), financial
allocation to public hospitals and adjustment of tariffs for private for-profit
hospitals (within the framework of national agreements). The directors of those
agencies are appointed by the Council of Ministers and are directly responsible
to the Minister of Health.

Until 2003, hospital planning involved a combination of two tools:
the healthcare mapping as a quantitative tool and the regional strategic health
plan as a more qualitative tool. The healthcare mapping divided each region into
healthcare sectors and psychiatric sectors. In 2003, the government decided to
integrate all planning tools into the regional strategic health plan. It sets
out the goals for the development of regional provision over a five-year period
in areas corresponding to national or regional boundaries.

Trends and Reforms

The health system faces numerous challenges, many of which are common
to other European coun - tries. Health expenditures continue to increase more
than re sour ces, leading to budget deficits. The number of doctors will
signifi - cantly decrease in the near future, coupled with the persistent unequal
distribution in existing medical professionals across the country. The excessively
high rates of mortality in the population under 65 show an urgent need to
develop preventive actions within a coherent public health framework.

To tackle these challenges and to improve health system
organisation and management, several major reforms have been introduced since
2004. They aim to change the behaviour of the stakeholders, focusing on the renewal
of the organisation and management of the health system and on financial
measures and incentives. The 2004 Public Health Policy and Health In surance
Reform Acts insist on the role of the state and parliament in priority setting
in the health sector. They give more power to local and/or dedicated structures
for implementation.

The ‘new hospital governance’ gives more flexibility and relative internal
organisational freedom to public hospitals, despite relativelystrict controls on hospital management. At a higher level, a strategic
plan for health workforce development promotes group practice and also
experiments with the transfer of tasks away from doctors to paramedical staff. The
reforms also focussed on health information systems with the creation of a
comprehensive electronic patient record, coupled with the referring doctor
system in primary care.The implementationof a French-type non mandatory gatekeeping system is also built on
a system of financial in - centives mainly directed towards patients.
Healthcare “franchises”, a new out-of-pocket payment, have been put in place in
2007 and 2008 on medical consultation, medicines, non-medical care and
transports Pharmaceutical regulations also include financial incentives for
pharmacists to substitute generic products for original medications when these
are prescribed by doctors, as well as charging levies on the pharmaceutical industry
related to advertising, sales promotion expenditures and turnover.

A new process of reform should start following the publication in the
first semester 2008 of several reports on various aspects of the healthcare
system (see na tional news p. 10).

The French Hospital System

Hospitals in France can be public, private non-profit or
for-profit. But in any case patients are free to choose their hospital and will
get more or less the same social insurance coverage.

Public hospitals account for a third of the 2,890 hospitals (1,599
of which acute care hospitals) but for two thirds of inpatient beds. They are
legally autonomous and manage their own budget. There are four levels of public
hospitals: local, general, regional and specialised. Local hospitals are
providing health and social care at community level. Most of their doctors are
self-employed private practitioners. General hospitals provide a range of acute
care services (medicine, surgery, and obstetrics), rehabilitation, longterm care
and in some cases psychiatric care. 32 regional hospitals, with a higher level
of specia lisation and technical capacity are in charge of more complex cases.
29 of them are linked to a university and operate as teaching and research
hospitals. In addition, there are 93 psychiatric hospitals. Non-profit
hospitals are owned by religious organisations, foundations or mutual insurance
associations.

They represent one third of hospitals and 15% of inpatient beds. Most
non-profit hospitals are “collaborating to public service” (PSH), since they
carry out public activities such as emergen cy care, teaching and social
program mes for deprived populations.

The range of services provided by non-profit hospitals varies. In
to tal, they account for one third of rehabilitation capacities, but less than 10%
of acute care beds. 20 specific non-profit private hospitals are specialised in
cancer treatment.

Private for-profit hospitals account for 40% of all hospitals in France
but 20% of all inpatient beds. They tend to specialise in cer tain areas such
as elective surge ry, where they cover 2/3 of the acti vi ty. This sector
invested in relatively minor surgical procedu res, carrying out three quarters
of cataract surgical procedures for example, but more than 60% of admissions
for digestive system disorders.

Resources and Activities

Hospitals, public and private, employ more than one million
people: 80% of them in public hospitals. 14% of these employees are medical
staff. Part-time work is increasing and concerns for example 20% of non-medical
staff in public hospitals.

With an average of 8.4 hospital beds (including long-term care) per
1,000 inhabitants, less than half of which are acute beds, France faced a rapid
downward trend in the number of hospital beds between 1980 and 2000, linked to
a reduction in the average length of stay. However, there are important
inequalities in bed numbers. The number of acute beds in the departments varies
from 2.5 to 6 beds per 1,000 in - habitants, excluding Paris, which has more
than 9.

During the same period, the number of people admitted to hospitals
continued to increase. A number of policies have been implemented to encourage
methods of providing care that are alternatives to in-patient care, such as day
care surgery or home care. The private for-profit sector is particularly active
in this field.

Since the 1960s, mental health policy in France has been based on
a continuous movement towards de-institutionalisation. A key process in this
movement has been to divide the country into geographical zones or areas
serving a particular population and to establish a multi disciplinary team in
each zone to provide preventive care, treatment, follow-up care and
rehabilitation for people living in that area and suffering from psychiatric
disorders.

Each psychiatric zone is linked to a hospital (either a public
hospital or a private hospital participating in the public hospital service). Quality
of care has become a significant concern since the 1990s. Since 1996, all
hospitals have been following a certification process, originally called
accreditation.

This mandatory procedure, carried out by a specific agen cy, the Haute
Autorité de Santé, is an external evaluation of procedures. The hospital is
evaluated on several dimensions: quality of care, information given to the
patient, medical records, general management (human resources, information
systems, and logistics), risk prevention strategies, etc.

Reforms

A reform plan, known as ‘Hôpital 2007’, had set major changes in the
late 1990s with the objective of improving overall efficiency and management
within the hospital sector.

The first element was the modernisation of healthcare facilities by
boosting investment on buildings and equipments. Total investment in hospitals
has doubled between 2003 and 2006. In parallel, the organisational structure and
planning of healthcare facilities have been simplified, and the health mapping,
that controlled the number of beds and medical equipment authorised for each
hospital was stop ped. Regulatory powers have be en shifted from the central
level to the regio nal hospital agencies.

The second measure was the introduction of an activity-based payment
system both for public and private hospitals. Previously, resources were
allocated to public and private hospitals by two different methods. The public
and most private non-profit hospital had budgets allocated by the regional
hospital agencies based on historical costs, with limited incentive for
efficiency. Private for-profit hospitals had a billing system with different
components: daily tariffs and a separate payment based on diagnostic and treatment
procedures. In addition, doctors working in for-profit private hospitals were
(and still are) paid on a fee-for service basis unlike those working in public
and non-profit hospitals, who are salaried.

A new activity-based payment system has been implemented step by
step for public and private non-profit hospitals from January 2004. A payment
is made for each patient treated in acute care based on the Groupes Homogènes
de Séjour (an equivalent of diagnosis-related groups) prices for the public
sector. The activitybased element of the payment was supposed to increase
gradually each year: 10% in 2004, 25% in 2005 and 35% in 2006.

Private for-profit hospitals have been paid entirely using the new
case-mix based system since 1 March 2005. However, a transition period was
allowed where ‘national prices’ have been adjusted, first taking into account the
prices for the private sector, and second using a transition coefficient for
each provider based on its own historical costs. The objective was to harmonise
the prices for all pro viders (public and private) by 2012.

The third element has been to give public hospitals flexibility to
deal with this new financial environment. The goal was to simplify the
management of public hospitals and to integrate medical staff in managerial
decisions. Hospitals now have the opportunity to create large clinical
departments in order to organise their medical activities in a more efficient
way.

Although public hospitals have obtained some freedom over their internal
organisation, their autonomy is still strictly limited in other ways. The
boards and executives of hospitals are still under the control of the Ministry
of Health and the ARHs (Agences régio - nales de l’Hospitalisation). Resource
allocation and most of the management rules concerning recruitment, investment
strategy and the use of new interventions are still constrained.

More recently, several committees and working groups have been
involved in designing a new set of reforms on the healthcare system
organisation, on the creation of Health (instead of Hospital) Regional
Agencies, on health inequalities and on hospitals. The issues range from
geographic repartition of doctors, the demography of specialist practitioners to
out-of-hours coverage.

More precisely, the main items for hospitals are: the planning of operating
theatres and maternities; the new management mechanisms for public hospitals
and the extension of the implementation of DRGs that already started with a
case mix-based financing representing 100 % of medicine, surgery and obstetrics
activities from 1 January 2008.

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